On July 1, 20X1, Littleton Inc Required:
?
Prepare All Entries to Record This Hedge Through

question 30

Essay

On July 1, 20X1, Littleton Inc.loaned a key supplier of raw material $2,000,000 to construct a new processing facility.The loan is due on July 1, 20X3 and pays interest each December 31 and June 30.The supplier insisted on a variable rate loan.Charles Upton, controller of Littleton Inc., wants to avoid the risk of variable interest rate fluctuations.As a result, Littleton Inc.entered into an interest rate swap in which it will pay the variable rate on $2,000,000 in exchange for a fixed interest rate of 8.3%.The swap is settled on the interest payment dates.Variable interest rates and the value of the swap on selected dates are as follows:
?
?
$\begin{array}{lll}&\text { Variable } \\&\text { Interest }&\text { Value of } \\&\text { Rate }&\text { the Swap }\\\text { July } 1,20 \mathrm{X} 1 & 7.90 \% & \\\text { December } 31,20 \mathrm{X} 1 & 7.75 \% & \$ 10,400\end{array}$

Required:
?
Prepare all entries to record this hedge through December 31, 20X1.

---

Definitions:

Nondisjunction

The improper separation of chromosomes during the process of cell division, resulting in cells possessing atypical numbers of chromosomes.

Gamete

Ovum or spermatozoon.

Chromosomes

Structures found within cells that contain DNA and proteins, responsible for carrying genetic information.

X-linked Color-blindness

A genetic condition affecting the ability to see colors correctly, passed down through genes located on the X chromosome.